3 Options Strategies to Get Rich (Without Getting Lucky)
Summary
TLDRThis video presents three simple, effective strategies for building wealth through options trading without relying on luck. The speaker emphasizes the importance of consistency, focusing on the covered call, cash-secured put, and wheel strategies. Each method is designed to generate steady income while managing risk, making them accessible to both new and experienced traders. The strategies are likened to real estate investments, where controlled risk and reliable income generation are key. The video also highlights the speaker’s personal experiences with trading and offers coaching for viewers seeking further guidance.
Takeaways
- 📈 The speaker emphasizes the importance of consistent income strategies over relying on luck for wealth growth.
- 💼 The covered call strategy is introduced as a reliable method for generating income from stockholdings by selling call options on owned stocks.
- 🏫 The speaker's experience in finance, including time spent shadowing financial advisers and traders, shapes his perspective on effective trading strategies.
- 📊 The covered call strategy is highlighted as a top strategy for the speaker, with a demonstration of its application using Apple stock as an example.
- 🔄 The concept of 'rolling' a covered call is explained, where the strike price is adjusted higher to continue generating income without selling the stock.
- 💰 The potential for consistent income from covered calls is underscored, with the speaker sharing his personal success and portfolio growth.
- 🏦 Cash secured puts are presented as a strategy for building wealth by selling put options on stocks you wish to own, with the potential to buy them at a set price.
- 🔗 The analogy of options trading to real estate is used to simplify the concept, likening stock to a rental property and option premiums to rental income.
- 🔄 The wheel strategy is introduced, combining covered calls and cash secured puts to create a consistent income cycle, which is praised for its safety and structured returns.
- 🌐 The speaker shares his personal journey and philosophy on wealth building, advocating for a lifestyle of freedom and travel, facilitated by his income strategies.
Q & A
What are the three option strategies discussed in the video to generate consistent income?
-The three option strategies discussed are the covered call strategy, cash secured puts, and the wheel strategy.
What is the covered call strategy and how does it work?
-The covered call strategy involves owning a stock and selling a call option on that stock. This allows the investor to collect premiums from the sale of the call option while still holding onto the stock.
How does the presenter manage the risk when using the covered call strategy?
-The presenter manages risk by selling out-of-the-money covered calls, which means selling call options with a strike price higher than the current stock price. If the stock price reaches the strike price, they can adjust the strike price higher or roll the position to a later expiration date.
What is the cash secured put strategy and how does it differ from the covered call strategy?
-The cash secured put strategy involves selling put options on a stock the investor owns while having enough cash on hand to buy the stock if the option is exercised. It differs from the covered call strategy in that it requires tying up cash rather than owning the underlying stock.
What is the wheel strategy and how does it combine the other two strategies?
-The wheel strategy combines covered calls and cash secured puts to create a consistent income-generating process. It involves selling puts to enter a position and then selling covered calls on the owned shares to generate income.
How does the presenter use the example of Apple stock to illustrate the covered call strategy?
-The presenter has a covered call on Apple with a strike price of $230. If Apple's stock price reaches $230, they may roll the position to a higher strike price, such as $235, to continue generating income without having to sell their shares.
What is the importance of choosing the right stocks when implementing these strategies?
-Choosing the right stocks is crucial because the strategies involve either owning the stock or having the cash to buy it. The presenter emphasizes selecting high-quality companies that one would want to own, as this aligns with the strategy's goal of generating income without relying on luck.
What is the potential annual return of the wheel strategy according to the presenter?
-The presenter mentions that the wheel strategy can provide an annualized return of 25 to 40%, depending on the stocks chosen and the market conditions.
How does the presenter's experience in finance and at Goldman Sachs influence his approach to these strategies?
-The presenter's background in finance and experience at Goldman Sachs as a financial analyst have shaped his focus on research and strategy. He emphasizes a structured and measured approach to options trading, which is reflected in his preference for the covered call, cash secured puts, and wheel strategies.
What is the role of branding in the presenter's investment strategy?
-Branding plays a significant role in the presenter's investment strategy. He mentions that he specializes in brand and tech, and that strong branding is one of the most important factors he looks for in a company before considering its technicals or fundamentals.
Outlines
💼 Introduction to Wealth Building Through Options Trading
The speaker emphasizes the importance of strategic wealth building over relying on luck, highlighting three simple and effective option strategies for generating consistent income. They share their own success, with a portfolio increase of 7.75% in a month and a personal profit of $227,000. The first strategy introduced is the covered call strategy, which the speaker has been using since the beginning of their trading career. They explain the concept of selling covered calls to generate income from stocks already owned, collecting premiums while retaining the stock. The speaker uses Apple as an example, illustrating how they manage their covered call positions and adjust the strike price to continue generating income without having to sell their shares unless they choose to do so.
📈 The Power of Covered Calls and Cash Secured Puts
The speaker delves deeper into the covered call strategy, explaining its safety and consistency, and how it can yield returns above the S&P 500 average. They draw an analogy between covered calls and rental property income, simplifying the concept for viewers. The second strategy, cash secured puts, is introduced as a method for building wealth without luck, involving selling put options on stocks one wishes to own, with enough cash on hand to purchase the stock if the option is exercised. The speaker argues that this strategy allows for control over risk and return, and cites research showing that selling cash secured puts can lead to significant annual returns. They also touch on the psychological aspect of decision-making, advocating for independent research and a system-based approach to investing.
🔄 The Wheel Strategy: Combining Covered Calls and Cash Secured Puts
The final paragraph introduces the wheel strategy, which combines covered calls and cash secured puts for a consistent income generation process. The speaker outlines the strategy: sell puts to enter a position, collect the premium if not assigned, and if assigned, sell covered calls on the acquired shares to generate further income. They emphasize the strategy's structure and control over risk and return, which is suitable for investors at any experience level. The speaker shares research indicating that the wheel strategy can yield annualized returns of 25 to 40%, especially with high implied volatility stocks. They conclude by discussing their own lifestyle, enabled by the income generated through options trading, and invite viewers to learn more about their coaching program or continue following their free content for insights on creating passive income.
Mindmap
Keywords
💡Covered Call Strategy
💡Consistent Income
💡Portfolio
💡Options
💡Risk Management
💡Strike Price
💡Income Generation
💡Out of the Money (OTM)
💡Rolling Options
💡Cash Secured Puts
Highlights
The video introduces three option strategies for consistent income without relying on luck.
The presenter's portfolio has increased by 7.75% in the past month, earning $227,000.
The first strategy is the covered call strategy, which has been used since the presenter started trading 10 years ago.
Covered calls involve owning a stock and selling a call option on it to collect premiums.
The presenter uses Apple stock as an example of a covered call strategy, with a current position and a $230 covered call.
If the stock price reaches the strike price, the presenter adjusts the strike price higher to continue generating income.
Covered calls are a safe strategy that provides a consistent source of income and controlled risk.
The second strategy is cash secured puts, which involves selling put options on a stock you own or want to own.
Cash secured puts can produce average annual returns of 24% when premiums and potential capital gains are considered.
The third strategy, the wheel strategy, combines covered calls and cash secured puts for a consistent income generation process.
The wheel strategy provides a structured approach to generate income with controlled risk and defined returns.
The presenter emphasizes the importance of not relying on luck but instead using a proven system to make money.
Options are compared to real estate, where you can generate income from owning an asset.
The presenter discusses the importance of controlling risk and knowing your return, which is possible with these strategies.
The video concludes with an invitation to join the presenter's 6E boot camp for hands-on coaching on these strategies.
The presenter shares his personal journey and how options have contributed to his freedom-based lifestyle.
Transcripts
three option strategies to get rich
without getting lucky guys this is going
to be a very important video so how do
you get rich without getting lucky this
is the no fluff and I'm going to say
that first of all simple scales and
fancy fails we're going to stay away
from all the crazy strategies and we're
going to focus on consistent income
strategies you can actually see my
portfolio it's up about 7.75% in the
past month I made
$227,000 so if you want to grow your
wealth you need to be strategic about it
which is why you don't need that many
strategies you just need to implement
the right strategies the first strategy
is going to be the covered call strategy
I've been using covered calls since the
dawn of Ages basically since I started
trading 10 years ago and during in
college I had some time I shadowed some
financial advisers some Traders some
everyone in the finance field right I
love Finance that's what I study that's
what I have a degree in I was talking to
a financial adviser who was managing NBA
player money okay this financial adviser
that he has made really good consistent
returns by just selling covered call I
heard this about 8 years ago and and I
was really intrigued well I didn't have
that much experience with them I had a
small portfolio I started off with
$22,000 now obviously we have multiple
portfolios on this channel two are both
at seven figures I scale small
portfolios medium portfolios big
portfolios I've had a lot of experience
and the cover call strategy to me is
going to stand out as the top strategy
or one of the top strategies we have
three simple strategies in this video
and all three simple strategies are
actually very very similar so the first
one covered calls popular strategy for
generating consistent income from um
your stockholding so from stocks that
you already have why not put them to
work put them to work so they can start
implementing and creating some income
for you by selling covered calls this
strategy involves owning a stock you do
have to have 100 shares and selling a
call option on that stock that's why
it's called a covered call by doing this
you collect premiums from the sale of
the call option while still holding on
to the stock all right that's the most
important thing I'm going to show you
how to manage the strategy in just a
little bit but simply said you have 100
shares and if the stock price goes to
the strike price of the covered call
you're in a little bit of trouble let me
explain what I mean all right let me
actually show you an example it's going
to be much better for you so right now I
have several positions in my portfolio
let's go to Apple this is my biggest uh
stock and I want to show you I do have a
covered call on Apple right now apple is
at $223 per share my average cost is
$186 average cost per share I'm up about
$290,000 guys which is quite a lot of
money on Apple it's been my best play
due to the strong brand I love Brands
guys branding is the most important
thing that I look for um before I look
at technicals and before I look at fun
mentals of a company it's what I
specialize in brand and Tech all right
so looking at Apple I have $230 covered
call if Apple goes to 230 I will have to
sell at 230 now guys I do not want to
sell at 230 but I want to create income
so how do I balance that what you should
be doing is you should be selling out of
the money covered calls so for example
apple is at 223 I sold a 230 covered
call that does not mean that I'm looking
to get rid of Apple at 230 I just think
in the short term apple is on bullish
but I don't think it's going to go to
230 or that much higher all right if it
goes to 230 what I will do is I will
adjust the strike price from 230 to 235
that will be my goal okay the covered
call is very simple when you sell a
covered call you collect income you get
paid and you do have to let go of the
stock at the strike price at expiration
but before expiration I can basically
close out the stock and then what I can
do I can close out the option and then I
can roll it higher I can adjust higher
usually I will adjust higher for a gain
or for no cost at all all right so I can
show you what that looks like I don't
need to do it right now everything is in
the clear this is a trade that I put out
in my Discord Community everything is
good but let's just say hypothetically
Apple went to 230 what I would do is I
would simply roll this position all
right I would roll it up I'll show you
this quick example and then we'll move
on to the second strategy that I will
use that uh can build a lot of wealth
and create consistent income so uh
currently this option expires on 920 you
can see here on September 20th all right
I'm going to adjust it to October 18 and
you can see here how the 235 five strike
is worth more it's worth $315 so the
total credit for me would be over $6,000
now guys why is that well it's because
when you are adjusting or fixing or
rolling an option more time equals more
money so that's the beautiful thing
about option you get paid for time
you're strategically Building Wealth and
you're getting rich by time strategy and
high quality companies okay so on Apple
I'm very bullish on Apple and I have
covered calls and I'm generating income
on the covered calls themselves so the
first strategy is covered calls that's
one of the best strategies to get rich
and you don't have to get lucky the
stock you move sideways you make income
the stock goes up you make money on the
stock and you made money on the option
and at worse you might have to roll it
higher or just let your shares get sold
off there's nothing wrong with buying
Apple for $220 and selling it off at 230
and you've gotten paid guys you've
gotten paid so uh you know that's one of
the top strategies that I would say is
over and over again consistent for me
and what I like about it a lot is I
control risk I buy 100 shares I like the
stock and I know exactly that the stock
you know about what it's worth and the
covered call really the worst that
happens is I make money right I make
money that's the worst that can happen
so I have very controlled risk I know
what my return is so I have a defined
return and there's really no luck the
covered call can provide a consistent
source of income it's consistent source
of income it's safe and studies actually
show that you can make well above
average returns in comparison to the S&P
500 which is very important for me
there's a reason why Warren Buffett
doesn't live in New York City he said
that he doesn't like other people's
opinions so I like to do the research
myself I like to form my own decisions
and uh for me I don't want to get lucky
I want to have a consistent proven
system to make money I've done a lot of
research right I've worked on Wall
Street according to a study by the CFA
Institute writing covered calls enhances
portfolio income without any substantial
risk it actually decreases risk so if
you want something safer than stocks
covered costs all right quick analogy
and then we'll go into the cash secured
puts which is my second strategy so a
quick analogy is imagine you have a
rental property okay options are very
similar to real estate guys a lot of L
of people think options are really hard
to learn no they're not they're very
very similar to how real estate
properties function and make income for
you so imagine you own a real estate
property all right you receive regular
payments from a tenants which helps you
cover your mortgage but it also provides
income all right so think about Apple
stock as the the house but the rent is
coming from like something like options
all right so that's kind of similar to
how it works and just like renting out
your property selling covered calls
involves zoning shares of stock and
receiving regular premiums and basically
that's how you collect monthly income
it's exactly what I'm doing all right
number two all right this strategy is a
cousin of the covered call it they
actually look very similar they both
have controlled risk and return you
don't have to get lucky to get rich off
of selling cash secured puts all right
cash secured puts are another effective
strategy for Building Wealth without
relying on luck this involves selling
put options on a stock you own while
having enough cash on hand to buy the
stock if the option is exercised if the
stock stays above the strike price right
you're selling a put option if it stays
above the strike price you're good you
get to keep the premium if it goes below
you have to purchase the stock but
that's a good thing that's always a good
thing if you're selling puts you should
be doing it on stock that you like guys
if you're selling puts on stocks that
you don't like something's wrong with
you up here you have to sell puts on
stocks that you do like don't put
yourself in a bad situation just don't
do it don't count on luck don't count on
emotion count on actual facts of what
works okay study what works do what
works all right and this is how you
basically make money there's no luck
involved you have a system and a process
and the best thing is you have control
over your risk because when you sell a
put option say you sell an $80 put you
know you have to tie up an $80 put is
$88,000 you're tying up 8 Grand you
might collect let's say $240 3% you
might be thinking to yourself ah 3% is
not that much I have 8 Grand of capital
being laid out no eight grand of capital
being laid out can't go to zero if
you're selling puts on a high quality
company that you want to own in theory
your risk is basically zero because you
want to buy the stock anyways but now
you're buying the stock and getting paid
3% what can be better than that I mean
it's please tell me what can be better
than that you're getting paid to buy the
stock all the stock buyers out there
they're buying the stock at the current
price you are getting paid literally
money in the bank right away to buy a
stock and you get to choose the price
you control your risk you control the
return that you get you know exactly how
much money you're making so that's how
you basically are building Strategic
Wealth and this is one of the best
options strategies to get rich and you
don't need any luck with it all right so
um I wanted to read you this research
that I I did here uh this is from the
Chicago Board of option exchange or the
sibo all right uh they show that selling
cash secur puts can produce average
annual returns of 24% when premiums and
potential capital gains are factored in
this strategy is effective because it
allows investors to set their entry
prices which I've been saying that all
the time is basically just saying the
same thing I was saying guys I'm buying
stocks hand over fist bicep over tricep
on the stocks that I want and by selling
puts I'm forced to dollar cost average
I'm forced to buy highquality companies
what's wrong with that bicep over tricep
guys I'm being forced to buy highquality
companies and I'm buying them and all
I'm doing is we'll talk about the
strategy number three which is the wheel
strategy all right I'm getting forced to
buy the stocks that I want then I'm
getting I'm selling puts then I can sell
covered calls so what you'll notice here
is that selling covered calls is
actually very similar to selling puts
right you're selling puts to get in you
get you have to tie up some Capital you
get premium for tying up that capital
for covered call you have basically the
shares that you bought and now you're
selling covered calls which is you have
Capital making you money so the equation
is very simple you have Capital that
makes you money so $88,000 makes you
let's say $240 a month or whatever in
two weeks so you have a return capital
and it's a process that process is the
wheel strategy I've been using this for
a very very long time because I wanted
safety guys I wanted safety I coach with
a lot of students and I help them retire
uh in my Discord Community I'm working
with folks that have 50k 100K and plus
and they're looking for a system and a
process to follow that to be honest is
so simple that anyone can do it so they
no longer have to work they can focus on
consistent income whether you know
people have different goals I have a
gentleman right now in New Jersey he has
a couple million portfolio and he's
looking at generating $40,000 per month
plus that's fine if youve reached that
scale if if you're at a different scale
and you have a 300K portfolio and you
just want to be like I had a student for
a long time I mentioned his name his
name is Denny I mentioned him many times
because he didn't want to do anything
interesting and I feel like that was
perfectly okay with me I feel like uh
that Vibes very well with so many
students that they don't have the best
option expertise they don't want to do
anything interesting they just want to
build wealth without really having to
over complicate it or betting on what
the market will do or or having
experiencing volatility so just selling
puts to get in can generate 3% per month
I've recently made a video on just doing
that on something like spy so you can do
a strategy like selling puts on a high
quality company which is what I
recommend or you can also do that on
something like spy with spy things are
very simple because spy already has
built-in diversification spy has 500 the
top companies already within it all
right so I'm going to wrap up here with
the wheel strategy so the wheel strategy
combines covered calls and cash secured
puts to create a basically a c or a
consistent income generating process
first you sell puts if you don't get
aign that's fine you've gotten premium
you're probably happy you're like I made
money why not if you do get assigned you
still want to make income right you have
shares well you sell covered calls so
you have a very good consistent cash
flow system and I have some research I
want to show you in a second but the
goal is to continuously cycle through
selling puts and cover calls this
strategy provides a structured approach
to generate income so again this is
something that anybody can copy whether
you're new to option trading or you're
already at the you know more experienced
uh you know level of option trading it
doesn't really matter you can control
your risk by selling puts and covered
calls and that's what makes the wheel
strategy such a strong strategy that
basically no luck you control the risk
you know what your return is and that's
what I love that's what I love about
these three strategies and I looked at a
back test by tasty trade and they
revealed that the wheel strategy went
executed with well chosen stocks guys
well chosen stocks that's what I look
for that's why I was a financial analyst
at Goldman Sachs I was not a Trader I've
never said I'm a Trader at Goldman Sachs
I was a financial analyst at Goldman
Sachs I was working in Los Angeles I was
uh looking at portfolios that were huge
I was looking at strategies and I was
doing a lot of option research I that's
what I love to do I loved option
research options just fascinated me
options were just so fascinating because
you can create mix and match options you
can make them very safe you can make
them very risky you have so much control
over options which is why I started
trading options such a long time ago for
me I thought it was going to get rich
quick of course I had a different
mindset back when I was uh 18 19 20 21
22 now that I'm 30 I basically have a
different mindset which is I want
consistent safe passive income that's
why you do see me living in hotels
because I'm traveling the world and I uh
have enjoyed that lifestyle I've enjoyed
trying new Cuisines and living a
freedom-based lifestyle it's been very
enjoyable and one day when I have a
family I look back at these times and
say I was crazy I've traveled the whole
world and options have been a big
contributor to that so look the wheel
strategy you can have an annualized
return of 25 to 40% if you go for the
more you know I covered Nvidia in a
recent video If you go for NVIDIA
there's a lot of volatility there so
high implied volatility stocks can give
you a lot of returns which is fantastic
that's where you can run the wheel sh
and make a lot of money so uh looking at
the research the wheel strategy uh
basically gives you a structured and
measured outcome which is what it's all
about guys structured and measured
outcome it's like baking a cake you know
the ingredients you know how to make a
good cake and then cake tastes good so
that's what I want to help you guys with
make consistent passive and safe income
and if you're looking to work with me
handson I do have a 6E boot camp during
that boot camp I show you how to trade I
show you all my trades give you access
to my Discord Community it's my highest
level coaching for six weeks I have
basically a lot of one-on-one time with
you group coaching sessions a whole
lot's in the program so if you want to
learn more about the program is the
first link in the description and I'll
be more than happy to show you guys how
to scale up or you can just keep
watching the free content I have here on
YouTube make sure to subscribe to my
channel so you can keep getting videos
on creating consistent passive income
that's my goal that's what I want to
teach and I'll see you guys in the next
video
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